Gateway Casinos & Entertainment postponed equity offering

For the time being at least, there will be no new group of shareholders at Gateway Casinos & Entertainment Limited, one of the country’s largest casino operators with 12 gaming properties in British Columbia and Alberta.

Plans by the company, which has at least three different classes of shareholders in the past decade, to go public and raise capital from a new group of shareholders, have been shelved. Indeed the financing has been either cancelled, withdrawn or deferred. In the vernacular of the underwriters: it has been postponed due to market conditions.

The company, which became a public company by way of an income fund in 2002, had initially hoped to raise $275 million with the shares priced in the range of $16.50-$19. Later the company scaled back its plans and hoped to raise $150 million with shares priced at $13 a piece.

Gateway has been a popular acquisition target. In 2007, an Australian group (Macquarie and Consolidated Media Holdings) outlayed $1.365-billion to become the sole shareholder. Two years later, the company initiated discussions with an ad hoc group of its first and second lien secured lenders. In 2010, it was restructured — and deleveraged — though it has made a couple of acquisitions since. In May the new owners decided they wanted to sell equity and use the proceeds to pay down some of the debt. But investors balked at the valuation demanded by the owners.